US Minimum Wage and its Impact on Jewelry Manufacturing
By Ted Doudak, CEO, RIVA Precision Manufacturing
In December 2017, the minimum wage in New York City increased to $13/hour for companies with 11 or more employees, and will eventually rise even higher to $15/hour by December 2018. This increase in minimum wage is lower in the areas outside of the five boroughs. However, it is evident that the labor pricing trend will continue. With the recent escalation, and an even higher $15/hour minimum wage on the horizon, the cost of manufacturing in the United States is continuing to drastically grow as labor costs go up.
For many employers, this is a story that has been played out before. From small stores to large organizations, firms across the board have been continually adapting—learning to become more competitive and profitable throughout the changing times. However, the most recent minimum wage increase adds another layer to the equation, with the surge being higher than usual and expedited over a shorter period of time. Therefore, employers need to offset these new costs and shifts in the market by finding solutions and finding them quickly.
Jewelry manufacturing is no exception to the financial tidal wave rolling across the United States from the escalating minimum wage. Recently, there has been a stronger push for outsourcing certain parts of production, and even offshoring altogether due to the lower cost of labor. This relocation has resulted in a variety of materials being sourced and created abroad, including silver, gold, findings, and other accessories. The question to be asked now is, what can the industry do to protect itself and support growth?
Proximity to the US market.
- Quick response time: For design, development, and final production, a US manufacturer can go from the concept to a finished product in the hands of the client faster.
- Relationships: We can set up visits with our customers or jump on a quick flight to see them within the US. There is nothing better than having a face-to-face connection with a client, which is key to building understanding in relationships and developing great communication.
- Cost advantage: Import and export costs are not applicable to working within the US, nor is the volatility of other countries’ laws affecting them.
- Technology: The US has made great strides in technology, with equipment and processes used to increase both quality and efficiency.
What else can be done?
- Training: Train yourself and your employees in order to increase day-to-day efficiency and to equip your company to succeed in the good and bad times.
- Team building: By using management best practices, and improving the environment, turnover will be cut down and employees will be happier, producing more with less.
- Invest: The world is a global community. Even in impoverished countries, the jewelry industry is attending international trade shows and acquiring the latest technologies. The Vicenzaoro show is a perfect example of this, and the RIVA technical team is there every January.
For any business to succeed, it needs to differentiate itself from the others with a unique value offering. What sets you and your product or service apart from competitors? There will always be a cheaper product and a less expensive supplier. However, your challenge is to make jewelry that is so beautiful and well-crafted that a few dollars more doesn’t make a difference because customers notice the value and continue coming back.
Just like any other challenge companies may face, an increase in the minimum wage can be seen as an opportunity to make your businesses stronger and help find creative ways to take your jewelry and your team to the next level of excellence.